From an unlikely partnership between an Austrian businessman and a Thai tycoon, drinks firm Red Bull has delivered astounding results.
Founded just 25 years ago, the company saw global revenues hit just shy of 5 billion Euros in 2012, selling more than 5.2 billion cans of drink in 165 countries. In the process, its founder Dietrich Mateschitz became one of the richest and most successful businessmen in Austria and his Thai co-founder, the late Chaleo Yoovidhya, one of the richest men in Thailand.
More than just another global brand, Red Bull’s runaway success also spawned an entirely new category in the global F&B market: the energy drink.
There are some well-known strategies behind Red Bull’s success including its involvement with extreme sports such as hang gliding and bungee jumping and its participation in the F1 circuit through its eponymous team.
Its slogan “Red Bull gives you wings” has seen the firm attach its brand (and considerable financial resources) to some high risk adventures in the world of aviation, including last year’s highest ever free-fall parachute jump from 39 kilometers above the Earth.
|Red Bull factfile|
|Co-founded in 1984 by Austrian Dietrich Mateschitz and Thai businessman Chaleo Yoovidhya|
|Drink formula based on long-standing Thai brand of energy drink|
|Global sales topped US$5bn in 2010|
|Brazil, Turkey and Japan are among the fastest growing markets|
|Firm remains in private hands with Mateschitz the largest shareholder|
This adventurous spirit is a reflection of Red Bull’s freewheeling corporate culture that has enabled the company to build an enviable performance record over the last 25 years.
Mateschitz himself personifies this culture. He eschews bureaucracy and famously rejected the recommendations of a market research report which advised to him to not even try to launch an energy drink. He relied on his gut-feel instead and spent one year changing the formulation of the drink from the original Thai version and another two years fine-tuning its marketing and communications strategy. The drink was launched in Austria in 1987 and in many European countries before the end of the millennium.
In a 2001 interview with the Financial Times, Mateschitz was quoted as saying that marketing is a simple job requiring “only a clear mind and bright eyes. Perkiness is the only prerequisite. Everything else you can learn quickly.”
Mateschitz has also pursued his passion for flying by maintaining a collection of classic airplanes (among them, one formerly owned by Yugoslavia’s late Marshall Tito) housed in a futuristic wing-shaped hangar near red Bull’s global headquarters. True to this passion (and its slogan), Red Bull employees have been reimbursed for taking flying lessons.
Mateschitz’ quirkiness is also evident in a number of other respects – the company HQ is in the tiny village of Fuschl in the Austrian Alps; he consumes several cans of Red Bull a day; and, despite his fame and fortune, rarely gives media interviews.
Possibly to preserve its unique strategies and resist external influences to change, Mateschitz has financed most of Red Bull’s expansion through internal profits rather issuing shares to the public or raising debt. In fact, for the first 15 years of its existence, little profits were taken out of the company.
The no-holds-barred approach allows Mateshitz and Red Bull to attract quirky people who have interesting ideas about taking the brand and the company forward. Harry Drnec, a former CEO of Red Bull’s UK operations was a fighter pilot during the Vietnam War and was credited with the spectacular rise of Mexico’s Sol beer in the intensely competitive premium-beer segment in London.
While leading Red Bull (UK), Drnec implemented innovative strategies especially in distribution focusing efforts on non-conventional garage forecourts, convenience stores and nightclubs and growing sales from 6 million cans in 1996 to 300 million cans in 2006.
The company building in Fuschl also typifies the two aspects of its culture – quirkiness and passion about the brand. The building is shaped in the form of two volcanoes with a herd of bulls spewing out from the volcanoes instead of lava. Red Bull’s award-winning Canadian HQ is also spectacular and has been described as “more nightclub than office”. With sports like skateboarding and frisbee played in the atrium, a visiting journalist termed the Canadian HQ as being “for the young or the young at heart.”
Red Bull’s unique culture goes beyond office symbolism however, and is also about freedom for each country operation to pursue strategies that they believe to be most appropriate to their local market.
Red Bull Canada, for instance, is more heavily involved in music (it aims to be a music producer) and arts (it owns a gallery space to exhibit, among other types of art, quirky non-traditional art such as Canada’s Best Doodle Art) than most other country operations.
Red Bull’s UK operations meanwhile have tried to launch new products such as Simply Cola and Carpe Diem, a herbal drink. While these efforts haven’t achieved much in the way of business success – something that may be considered as an issue – the important point is that the freedom of pursue new strategies reinforces the freewheeling culture.
Despite the seemingly laid-back approach, Red Bull has maintained consistency in its marketing and communications strategy. In Mateschitz’ words, Red Bull has been “speaking in the same tone of voice” since its launch in 1987.
While serving as the glue holding the global organisation together, the freewheeling culture has its downsides. Unlike a globally coordinated corporation, neither its overall strategy, nor its marketing communications are tightly integrated.
Inefficiencies may also creep in from particular initiatives. At a cost of US$220 million, Red Bull’s Major League Soccer (MLS) stadium in New Jersey was twice as expensive as any other MLS stadium in the US with analysts questioning whether the investment would ever bear fruit.
Red Bull may also be less efficient than it could be because there are few efforts to share best practices across different operations or to streamline processes. These inefficiencies have not impacted Red Bull in the past because of its premium pricing and dominant market share in many markets.
Despite its shortcomings, the Red Bull culture has paid rich dividends for the firm, especially for its founders and employees. It also shows the powerful impact created by a strong corporate culture—in terms of attracting employees and implementing innovative strategies.
Clearly there is much to learn from Red Bull.
This article was first published on Forbes Asia